Top 7 NFT Scams to Watch for
While the NFT market has opened up new opportunities for artists and creators to monetize their work, it has also created an opening for scammers to exploit and siphon crypto and JPEGs from unwitting victims.
In this guide you will find a list of the most common NFT scams and how to avoid them.
Common NFT scams to avoid
Let’s take a look at scams that have managed to con collectors out of millions of dollars since the rise of the NFT market.
Phishing scam
To buy an Ethereum (ETH)-based NFT, you need a crypto wallet that supports the ERC-721 standard. MetaMask is arguably the most popular wallet for NFT creators and collectors.
However, MetaMask wallets have been (and still are) targeted by phishing scams involving fake ads, apps, and websites asking wallet users for their private keys or recovery phrases. Malicious actors then use the information to empty your crypto wallet of all its assets.
You can avoid this scam by remembering that you only need the seed phrase to back up or restore your wallet. Never share your recovery phase or private key with anyone.
NFT airdrop scam
Scammers create malicious NFT project websites that promise free NFT gifts. While some NFT gifts are genuine, a large number of them are scams.
The idea behind this scam is that you connect to your crypto wallet so they can use malicious code to steal your crypto assets out of your wallet once connected.
You can avoid this by verifying the NFT trading platform or project on social media or avoiding NFT airdrops altogether (unless they are hosted by trusted platforms).
Pumping and dumping arrangements
NFT fraudsters use pump and dump schemes to artificially inflate the price of their NFT collection to make bank. They do this by making multiple bids in a short period of time to build hype around the NFT drop. Once prices have risen to a certain level, the scammers cash out, leaving clueless buyers with NFTs they overpaid for.
You can avoid this scam by reviewing the transaction history and wallet records of the NFT collection you are interested in. You can see the number of transactions and buyers for the NFT collection on NFT marketplaces such as Open sea. Also, Etherscan allows you to view transaction history on the Ethereum blockchain.
Bid fraud
Bid fraud usually occurs in the secondary market when you try to resell the NFT to the highest bidder. Once you’ve listed your NFT and an interested buyer places the highest bid, scammers can switch the cryptocurrency being used without telling you. This way you end up receiving USD 10 instead of the ETH 10 you agreed upon.
You can avoid this scam by checking the transaction currency before starting the transactions.
Counterfeit NFTs
Embossing an artwork as an NFT is not the same as owning the original or having intellectual ownership (IP) over it.
On a platform like OpenSea, you can turn any image into an NFT whether you own the rights to it or not. Fraudsters mislead users into thinking they are buying a legitimate NFT by plagiarizing NFTs from another user’s work and proceed to list the counterfeit on an NFT marketplace for auction. The buyer ends up buying a counterfeit piece of art, which becomes worthless when the fraud is exposed by the community.
You can prevent this scenario by making sure that the NFT you buy on a marketplace is from a verified account. You can also contact the artist via social media channels to confirm ownership of the NFT.
Imitation of customer support
Fraudsters infiltrate NFT projects’ social channels such as Telegram and Discord and pretend to be customer support. Their goal is to obtain the users’ private keys to the wallet, so that they can steal the assets in the wallet.
To avoid this scam, make sure you only access a specific Telegram channel or Discord server through an NFT creator’s official page or website.
Do not interact with strangers on the Internet who claim to be from an NFT project or corporate customer support. Real customer support will only interact with you through trusted channels after you’ve reached out for help
Imitation of social media
Similar to customer support impersonation scams, cybercriminals also like to create fake social media accounts for NFT projects with the intention of getting social media users to access a fake NFT project website or marketplace to gain access to victims’ wallets by allowing them to connect to a malicious smart contract.
Unfortunately, scammers are as common in the NFT market as they are in the wider crypto ecosystem. That’s why it’s important to stick to basic online security best practices, like double-checking any website, app, or platform you use to make sure they’re legitimate and to avoid interacting with anonymous people offering you something for free on social media channels.
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Learn more:
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– Players play different strategies: Minecraft says no to NFTs, while Square Enix unveils its NFT project
– NFT Hackers Attack: Influencer Zeneca and Platform PREMINT are the latest targets
– NFTs have won Damien Hirst’s art experiment so far with over 2000 tokens burned
– 7 DeFi risks you should be aware of according to CoinShares
– MetaMask aims to help crypto fraud and phishing victims take legal action against fraudsters
– New Elon Musk Crypto Scam Deepfake Promises 30% Return on Deposit
– Here’s how you can protect yourself from phishing when your Trezor is attacked
